Government
procurement was originally omitted from the scope of the main
multilateral trade rules opening up market access. In the General
Agreement on Tariffs and Trade, originally negotiated in 1947,
government procurement was explicitly excluded from the key national
treatment obligation. More recently, government procurement has been
carved out of main commitments of the General Agreement on Trade in
Services. Since it is estimated that government procurement typically
represents 10-15% of GDP, this represents a considerable gap in the
multilateral trading system.

A
growing awareness of the trade-restrictive effects of
discriminatory procurement policies and of the
desirability of filling these gaps in the trading
system resulted in a first effort to bring government
procurement under internationally agreed trade rules in
the Tokyo Round of Trade Negotiations. As a result, the first Agreement on Government Procurement was signed in
1979 and entered into force in 1981. It was amended in 1987, with this amended version entering into force in
1988. In parallel with the Uruguay Round, Parties to the
Agreement held negotiations to extend the scope and
coverage of the Agreement. The
Agreement on Government Procurement (1994) (GPA) that is
currently in force was signed in Marrakesh on 15 April 1994 — at the
same time as the Agreement Establishing the WTO. The new Agreement
entered into force on 1 January 1996. The GPA is one of the
“plurilateral” Agreements included in Annex 4 to the Marrakesh Agreement
Establishing the WTO, signifying that not all WTO Members
are bound by it.

Cornerstone
principles: non-discrimination and transparencyback
to top

The
GPA establishes an agreed framework of rights and
obligations among its Parties with respect to their
national laws, regulations, procedures and practices in
the area of government procurement. An important cornerstone principle
in this regard is non-discrimination. In
respect of the procurement covered by the Agreement,
Parties to the Agreement are required to accord to
the products, services and suppliers of any other Party
to the Agreement treatment “no less favourable”
than they give to their domestic products, services
and suppliers (Article III:1(a)).
Further, Parties may not discriminate among goods, services and
suppliers of other Parties (Article III:1(b)). In addition, each Party
is required to ensure that its entities do not treat domestic suppliers
differently on the basis of a greater or lesser degree of foreign
affiliation or ownership as well as to ensure that its entities do not
discriminate against domestic suppliers because their good or service is
produced in the territory of another Party (Article III:2).

The use of offsets — measures to encourage local
development or improve the balance-of-payments accounts by means of
domestic content, licensing of technology, investment requirements,
counter-trade or similar requirements — are explicitly prohibited in the
Agreement. Notwithstanding this, developing countries may negotiate, at
the time of their accession, conditions for the use of offsets provided
these are used only for the qualification to participate in the
procurement process and not as criteria for awarding contracts (Article
V).

In order to
ensure that the basic principle of non-discrimination is followed and
that access to procurement is available to foreign products, services
and suppliers, the Agreement also places considerable emphasis on
procedures for providing transparency of laws, regulations, procedures
and practices regarding government procurement.

There
is a general requirement to publish laws, regulations,
judicial decisions, administrative rulings of general
application and any procedures regarding government
procurement covered by the Agreement. The relevant
publications are listed in Appendix IV (Article XIX:1).
As a further element of transparency under the Agreement,
each government must collect and provide to the other
Parties, through the Committee, statistics on its
procurement covered by the Agreement (Article XIX:5).

The
Agreement does not apply to all government procurement of
the Parties. The obligations under the Agreement apply to
procurement:

by
the procuring entities that each Party has listed in Annexes 1 to 3 of Appendix I,
relating respectively to central government
entities, sub-central government entities and
other entities such as utilities;

of
goods;

of
services and construction services that are
specified in lists, found respectively
in Annexes 4 and 5 of Appendix I; and

of
an estimated value not less than certain threshold values, which are
specified in each Party's Appendix I Annexes. For a number of
Parties, the thresholds are set at 130.000 SDR (Special Drawing
Rights) for goods and services procured by central government (Annex
1) entities. Higher thresholds are applicable in respect of
sub-central (Annex 2) and “other” (Annex 3) entities. A separate
threshold which, for some Parties, is set at 5,000,000 SDR is
applicable to construction services procured by all entities.

When
reading the schedules in Appendix I to ascertain whether
a particular procurement contract is covered by the
Agreement, it is important to check not only whether the
procuring entity is covered, the threshold level and, if
the contract is for a service, whether that service is
covered, but also the General Notes at the end of most
Parties schedules which provide for a number of
exceptions. It should be noted that exceptions from the
obligations of the Agreement are also allowed for
developing countries in certain situations (Article V)
and for non-economic reasons, for example to protect
national security interests, public morals, order or
safety, human, animal or plant life or health or
intellectual property, etc. (Article XXIII).

Article
XXIV:6 of the Agreement authorizes Parties to modify the mutually agreed
coverage of Appendices I to IV, subject to the procedures for
rectification and modification specified in that provision. Since its
signature in April 1994, the Agreement’s scope has been expanded through
the incorporation in it of the results of a series of bilateral
agreements between individual Parties. A “loose-leaf system”
reflecting the present state of Parties' schedules (Appendix I) is kept up
to date on the WTO website.

Article IX:11
of the Agreement requires that tender notices state clearly, either in
the notice itself or in the publication in which it appears, whether the
procurement in question is covered by the Agreement.

The
Agreement contains a number of detailed procedural
obligations which procuring entities have to fulfil to
ensure the effective application of its basic principles
(Articles VII to XVI). In many respects, these provisions codify
recognised good practices in the area of government procurement aimed at
ensuring efficiency and value for money. In the context of the GPA, they
also serve the purpose of guaranteeing that access to covered
procurement is open and that an equal opportunity is given to both
domestic as well as foreign supplies and suppliers in competing for
government contracts.

Prior
to the actual tendering process, Parties are required to
publish an invitation to participate in the form of a tender
notice in a publicly accessible publication indicated
in Appendix II to the Agreement. The purpose of this measure is to
inform all interested suppliers about the procurement opportunity and
the relevant aspects of the procurement in question. Entities at central
government level in Annex 1 are required to use a notice of proposed
procurement, whereas other entities in Annexes 2 and 3 may, under
certain conditions, use a notice of planned procurement or a
notice regarding a qualification system to fulfil the requirements of
the tender notice (Article IX:3, 7, 9).

The
Agreement allows the use of open, selective and limited
tendering procedures, provided they are consistent with
the provisions laid out in Articles VII to XVI.

Under
open procedures all interested suppliers
may submit a tender (Article VII:3(a)).

Under
selective tendering procedures only those
suppliers invited to do so by the entity may
submit a tender (Articles VII:3(b) and
X). To
ensure optimum effective international
competition, purchasing entities are required to
invite tenders from the maximum number of foreign
suppliers. Safeguards to ensure that the
procedures and conditions for qualification of
suppliers do not discriminate against suppliers
of other Parties are set out in Article VIII. For
example, any conditions for participation in
tendering procedures by suppliers shall be
limited to those that are essential to ensure the
firms capability to fulfil the contract and
shall not have a discriminatory effect. Once a
year the entities using the selective tendering
method are required to publish, in a publication
indicated in Appendix
III to the Agreement, their
lists of qualified suppliers, and to specify the
period of validity of those lists and the
conditions that need to be met for inclusion of
interested suppliers in the lists (Article IX:9).

Under
limited tendering procedures the entity
contacts the potential suppliers individually
(Article VII:3(c)). The Agreement closely
circumscribes the situations in which this method
can be used, for example in the absence of
tenders in response to an open tender or
selective tender or in cases of collusion, when
the product or service can be supplied only by a
particular supplier, or for reasons of extreme
urgency brought about by events unforeseeable by
the entity (Article XV).

Entities
may hold negotiations with suppliers making
tenders, provided this is indicated in the initial tender
notice or it appears from the tender evaluation that no
one tender is the most advantageous and subject to
safeguards to ensure that such negotiations do not
discriminate between suppliers (Article XIV).

The
Agreement prescribes certain minimum deadlines that must be
allowed for the preparation, submission and receipt of tenders to enable
responsive tendering (Article XI:2). These must be set long enough to
allow all suppliers, domestic and foreign, to prepare and submit tenders
before the closing of the tendering procedures. In
general the minimum period is 25 days for the receipt of applications to
be invited to tender in the case of selective tendering, and 40 days for
the receipt of tenders, counting from the date of publication of an
invitation to tender. The minimum time-limits for receipt of tenders may
be reduced to 24 or even 10 days in certain well-defined circumstances —
for instance, 10 days in the case of a state of urgency.

In
the tender documentation the purchasing entity is
required to give all necessary information related to the
procurement in question to enable potential suppliers to
submit responsive tenders, including information required
to be published in tender notices and other important
information, for example economic and technical
requirements, financial guarantees and the criteria for
awarding the contract and procedural information such as
the closing date and time for receipt of tenders (Article
XII).

The Agreement contains obligations on technical specifications in
order to ensure that entities do not discriminate against and among
foreign goods and suppliers through the technical characteristics of
products and services that they specify (Article VI). Technical
specifications shall be in terms of performance rather than design, and
be based on international standards, where they exist, or otherwise on
national technical regulations, recognized national standards, or
building codes.

The
objective of the procedural rules for submission,
receipt and opening of tenders is to ensure fairness,
equity and transparency in the procurement process
(Article XIII:1-3). All tenders solicited under open
and selective procedures by entities shall be received
and opened under procedures and conditions guaranteeing
the regularity of the openings.

Only
tenders that conform to the essential requirements of the
tender notice or documentation and are from a supplier
which complies with the conditions for participation can
be considered for award. Entities have the
obligation to award contracts to the tenderer who has
been determined to be fully capable of undertaking the
contract and whose tender is either the lowest tender or
the tender which is determined to be the most
advantageous in terms of the specific evaluation criteria
set forth in the notices or tender documentation. An
entity that has received a tender abnormally lower than
other tenders may enquire with the tenderer to ensure
that it can comply with the conditions of participation
and be capable of fulfilling the terms of the contract
(Article XIII: 4).

The
modes of transmission of data foreseen under the relevant
provisions of the Agreement are telex, telegram,
facsimile. The Agreement recognizes the fact that its
provisions do not take into account the rapidly emerging
use of information technology in government procurement.
In order to ensure that it does not constitute an
obstacle to technical progress in this area, the
Agreement calls for regular consultations in the
Committee regarding developments in information
technology and, if necessary, negotiation of
modifications to the Agreement itself
(Article XXIV:8). Following
such negotiations undertaken pursuant to Article XXIV:7 of the GPA
(1994), in December 2006 the negotiators reached provisional agreement
on the text of a revised Agreement which provides for the use of
electronic tools in the procurement process.

Information
must be provided, after the award of the contract,
on the award decision in the form of a notice, giving
information on such matters as the nature and quantity of
the products and services in the contract award, the name
and address of the winning tenderer, and the value of the
winning award or the highest and the lowest offer taken
into account in the award of the contract (Article
XVIII:1).

Moreover,
in response to a request from a supplier from a Party to
the Agreement, the procuring entity must provide prompt
and pertinent information on: its procurement practices;
an explanation of the reasons why a suppliers
application to qualify was rejected; why its existing
qualification to tender was brought to an end; and on the
characteristics and relevant advantages of the tender
selected (Article XVIII:2). However, entities are
entitled to withhold certain information on grounds of
confidentiality (Article XVIII:4) since the Agreement provides
for the protection of confidential information
(Article XIX:4). Furthermore, the government of an
unsuccessful tenderer, if a Party to the Agreement, may seek
such additional information on the contract award as is
necessary to ensure that the procurement undertaken in a fair and
impartial manner (Article XIX:2).

The
Agreement recognizes the development, financial and trade
needs of developing countries, in particular
least-developed countries, and allows special and
differential treatment in order to meet their specific
development objectives (Article V:1). Development
objectives of developing countries should be taken into
account in the negotiation of coverage of procurement by
entities in developed and developing countries
(Article V:3, 5-7). Article V also contains
provisions on: technical assistance
(Article V:8-11); establishment of information
centres giving information on procurement practices and
procedures in developed countries (Article V:11); special
treatment for least-developed countries (Article V:12 and
13); and review of the application of Article V (Article
V:14 and 15). As an exception to the general prohibition of offsets,
developing countries may negotiate, at the time of their accession,
conditions for the use of offsets provided these are used only for the
qualification to participate in the procurement process and not as
criteria for awarding contracts (Article XVI).

Disputes
between Parties under the Agreement are subject to
the procedures of the WTO Understanding on Rules and
Procedures Governing the Settlement of Disputes (DSU)
(Article XXII:1). Because of the plurilateral nature of
the Agreement, Article XXII contains a number of special
rules or procedures (Article XXII:3, 5-7). Of
particular interest is the provision disallowing
so-called cross-retaliation  the
suspension of concessions or other obligations under the
GPA as a result of disputes arising under the other WTO
Agreements as well as suspension of concessions or other
obligations under any other WTO Agreement because of any
dispute arising under the GPA (Article XXII:7).
Moreover, under the Agreement the DSB has the authority to authorize
consultations among parties to a dispute
regarding remedies when withdrawal of a violating measure
is not possible (Article XXII:3).

Article XX of the GPA sets out
mandatory requirements for the establishment of a
domestic bid challenge system, giving suppliers
believing that a procurement has been handled
inconsistently with the requirements of the GPA a right
of recourse to an independent domestic tribunal. Parties
may confer the authority to hear challenges by suppliers
on national courts or on an impartial and independent
review body. In the event that a bid challenge is heard
by a review body which does not have the status of a
court of law, either its decisions must be subject to
judicial review or it must follow the procedures/criteria
laid down in detail in the Agreement (Article XX:
6(a)-(g)). The challenge body must have the authority to
order the correction of a breach of the Agreement or
compensation for the loss or damages suffered by a
supplier, but this may be limited to costs for tender
preparation or protest. Pending the outcome of the
challenge, it must be able to order rapid interim
measures, including the suspension of the procurement
process, to correct breaches of the Agreement and to
preserve commercial opportunities (Article XX:7 (a)-(c)).